CORVALLIS (AP) — A small Oregon startup company developing new technology to convert waste wood and grass into biofuel has won a $100,000 federal grant.

Trillium FiberFuels is testing a new method for making cellulosic ethanol from fibrous plant material.

The U.S. Energy Department grant last week was the only one made to an Oregon company by the agency’s Small Business Innovation Research program.

Trillium was one of 360 companies receiving a total of $36 million nationwide.

The grant money will boost the renewable fuel company’s credibility with investors but is not enough for its research, said Chris Beatty, a former Hewlett-Packard employee and co-founder of Trillium.

Trillium is also seeking a grant from the Oregon Nanoscience and Microtechnologies Institute as well as funding from the state under the Business Energy Tax Credit.

“If they get something going, we’d probably participate in some way with a tax credit,” said Rick Wallace, a senior policy analyst for the Oregon Department of Energy. “The time is coming when we back off the incentives for corn and send them to cellulosic.”

Cellulosic ethanol is “really where Oregon wants to go” with renewable fuel development, said Wallace.

Ethanol — the same kind of alcohol found in wine, beer and liquor — can also be used as fuel or a fuel supplement, and can be made with a variety of crops.

The federal government has supported conversion of corn into ethanol, but critics point out it takes larges amounts of energy to produce and diverting corn into biofuel production is contributing to rising food prices around the world.

Waste wood and grass, however, are abundant and have no food value, supporters say.

“There’s a huge opportunity for cellulosic” in Oregon, said Tomas Endicott, a co-founder of SeQuential-Pacific Biodiesel and a renewable energy consultant. “It absolutely is worthwhile to invest in that technology today to bring down the costs and improve the technology.”

The grant puts Trillium in the running for the second phase of the small business grants for up to $1 million if the technology proves feasible.

Founded in 2006 by three former Hewlett-Packard employees and an Oregon State University researcher, Trillium is looking for a commercially-viable way to process cellulose, the abundant fiber that gives plants their structure.